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TMI Blog2021 (4) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... ORJI VALLABH DAS [ 196 2 (3) TMI 6 - SUPREME COURT ] has held that income tax is a levy on income and the Act takes into account two points of time at which the liability to tax is attracted i.e., accrual of income or its receipt but substance of the matter is the income. It has further been held that if the income does not result at all, there cannot be a levy of tax even though in book keeping entry is made about a hypothetical income which does not materialize. In the instant case, the provisions were created during the course of the year and reversal of entry was also made in the same accounting year. The Assessing Officer erred in law in holding that assessee should have deducted tax as per the rate applicable along with interest. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Venture and is a subsidiary of Toyota Motor Corporation, Japan. The assessee is engaged in manufacturing and sale of passenger cars and multi utility vehicles. The assessee follows mercantile system of accounting and as per its accounting policies, the assessee at the end of the financial year i.e., 31st March of every year makes provision for marketing expenses, overseas expenses and general expenses on estimate basis in respect of works / contracts / services, which are in progress of completed but vendor is yet to submit bills to ascertain closest amount of profits / loss. The aforesaid provision is made in conformity with Accounting Standard -29. Subsequently, as and when invoices are received from the vendors the invoice amount is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alization of services was reversed in the books of accounts of the assessee. The assessee received a communication on 30.07.2013 asking it to furnish details of computations of income, audit report in Form 3CD for the year ending 31.03.2012 reflecting the details of disallowances made under Section 40a(i) and (ia) of the Act. The assessee thereupon furnished the information vide communication dated 12.08.2013. 4. The Assessing Officer initiated the proceeding under Section 201 and 201(1A) of the Act and treated the assessee as assessee in default in respect of the amount made in provision, which was reversed / un utilized for a sum of ₹ 8,71,32,988/- and the amount of TDS and interest on the aforesaid amount under Section 201(1A) w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interpreted with reference to the taxing event. It is further submitted that in the fact situation of the case neither provision of Section 201 nor Section 201(1A) could have been invoked. However, the aforesaid aspect of the matter have been considered by the authorities. In support of aforesaid submissions, reliance has been placed on decisions in 'DIRECTOR OF INCOME TAX VS. ERICSSON COMMUNICATIONS LTD., (2015) 378 ITR 395, 'KARNATAKA POWER TRANSMISSION CORPORATION LIMITED VS. THE DEPUTY COMMISSIONER OF INCOME TAX (TDS) CIRLCE 26(2)', (2016) 383 ITR 59, 'COMMISSIONER OF INCOME TAX, BOMBAY CIT I, BOMBAY VS. SHOORJI VALLABHDAS CO.', (1962) 46 ITR 144, 'PR.COMMISSIONER OF INCOME TAX-4, AHMEDABAD VS. SANGHI INFRAS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax: Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with thteprovisions of this Chapter on the sum paid to a payee or on the sum credited to the account of a payee shall not be deemed to be an assessee in default in respect of such tax if such payee (i) has furnished his return of income under Section 139; (ii) has taken into account such sum for computing i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is made. In other words, when an income accrues under the provisions of the Act. 10. The Supreme Court in SHOORJI VALLABH DAS supra has held that income tax is a levy on income and the Act takes into account two points of time at which the liability to tax is attracted i.e., accrual of income or its receipt but substance of the matter is the income. It has further been held that if the income does not result at all, there cannot be a levy of tax even though in book keeping entry is made about a hypothetical income which does not materialize. The High Court of Delhi in Ericsson Communications Ltd. supra has also taken a view that in the absence of any accrual of income, there is no obligation on the part of the assessee to deduct tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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